As opposition mounts against the Central Bank of Nigeria’s (CBN) recent directive to commercial, merchant, non-interest and payment service banks to start charging the 0.5 per cent Cybercrime Levy on some electronic transactions, PAUL OGBUOKIRI and ABDULWAHAB ISAH report that Nigerians are already overburdened by the unfavourable economic conditions in the country. They posit that it would amount to an overkill to ask Nigerians to pay any other form of tax or levy again. That is amid several other tax burdens, charges and levies they are paying
According to a former Commissioner of Finance at State of Imo State and Professor of Finance and Capital market at the Nassarawa State University, Keffi, Uche Uwaleke, the cybersecurity levy is ill-timed, coming at a time when the Central Bank of Nigeria is concerned about the high rate of financial exclusion and the increasing rate of currency circulating outside the Nigerian banking system. Uwaleke noted that the levy carries the downside risk of discouraging financial intermediation as well as complicating the transmission of monetary policy, with more people shunning the banks due to high charges.
“The end result is that it makes difficult the efforts by the Central Bank of Nigeria to tame inflation. “So, I think the circular should be withdrawn, especially against the backdrop of assurances by the government that its plan to increase revenue would not include introducing new taxes or increasing tax rates.” He further warned that if the Central Bank goes ahead to collect the new levy, Nigerians would be forced to resort to saving their money under their pillows, thus rubbishing all the past efforts the apex bank had made to improve financial inclusion in the country.
Uwaleke further urged the government to suspend the policy, even as it gets set to implement the recommendations of the Presidential Committee on Fiscal Policy and Tax Reforms, whose mandate includes streamlining multiple taxes and levies currently inhibiting the growth of businesses in Nigeria. Also speaking, a Wealth Management Expert, Mr. Gabriel Idakolo, said that the decision of the Central Bank of Nigeria to implement the Cybersecurity Act at this time was unfortunate because many businesses were already struggling to survive under Nigeria’s very harsh economic condition.
According to him, most businesses in Nigeria have their profits depleted or completely eroded due to inflation and cost of doing business in the country, adding that this additional burden on businesses, especially will be Herculean task to surmount by businesses. “Imagine a N10 million transfer attracting N50, 000. The charges need to be reviewed or totally stopped because of its attendant negative implications on the economy,” Idakolo said.
Revocation, way to go -LCCI
Speaking against the backdrop of the negative implication of the new levy on the economy, the Lagos Chamber of Commerce and Industry (LCCI) has warned that the cost of doing business in the country, especially now that the Nigerian economy is struggling and the citizenry are aching out a living will go haywire if the levy is allowed. In a statement, the Director General of LCCI, Dr. Chinyere Almona, expressed worry over the additional financial burden that individuals and businesses would face due to this levy, especially in the light of ongoing challenges such as erratic power supply, high energy cost worsened by the recent hike in electricity tariffs, high cost of living and high of transportation caused by removal of fuel subsidy. Almona emphasised the need for the government to reconsider the implementation of this directive, citing its untimely nature and lack of clear justification.
She called for the withdrawal of the directive to allow for further consultations with key stakeholders, particularly at a time when government revenues are at a peak due to ncreased crude oil prices and savings from subsidy removal. Highlighting the adverse impact of the levy on consumers’ purchasing power and businesses’ production costs, Almona questioned the effectiveness of the levy in protecting payers from cyber-attacks. She also raised concerns about the potential confusion surrounding exemptions and the possibility of individuals reverting to cash transactions to avoid the levy, which could undermine the progress made with the cashless policy and financial inclusion.
Almona urged the government to amend relevant laws to reflect current realities, implement economic stimulus programmes, and invest in digital infrastructure to support business operations. She also called for transparency in the utilization of levy funds earmarked for cybersecurity, emphasising the need to align tax initiatives with existing reform efforts to prevent multiple taxation and ensure effective coordination. Almona further stressed the importance of enhancing cybersecurity measures and fostering a conducive business environment through strategic policy interventions.
Why CBN wants banks to commence collection of Cybercrime levy Recall that the Central Bank of Nigeria, on Monday issued the directive to the banks to commence the collection of the 0.5 per cent levy on some electronic transactions. A circular to this effect was posted at the website of the apex bank on Monday. It was disclosed that the implementation of the levy collection would start two weeks from Monday. The circular was directed at all commercial, merchant, non-interest and payment service banks, other financial institutions, mobile money operators and payment service providers. The circular further revealed that it was a follow-up on to an earlier one and letter dated June 25, 2018 (Ref: BPS/DIR/GEN/ CIR/05/008) and October 5, 2018 (Ref: BSD/ DIR/GEN/LAB/11/023) respectively on compliance with the Cybercrimes (Prohibition, Prevention, Etc.) Act 2015. The CBN said that all banks, other financial institutions and payment service providers were now required to implement the directive, saying, “The levy shall be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution.
The deducted amount shall be reflected in the customer’s account with the narration. ‘Cybersecurity Levy’ “Deductions shall commence within two weeks from the date of this circular for all financial institutions and the monthly remittance of the levies collected in bulk to the NCF account domiciled at the CBN by the fifth business day of every subsequent month.” Exempted from the levy include, loan disbursements and repayments, salary payments, intra-account transfers within the same bank or between different banks for the same customer, intra-bank transfers between customers of the same bank, Other Financial Institutions instructions to their correspondent banks, interbank placements Banks’ transfers to CBN and vice-versa. The CBN, in recent times, has been making an effort to sanitise the financial sector. It recently issued a directive which barred fintechs from onboarding new customers. The fintechs have in turn warned their customers against engaging in crypto transactions on their platforms.
This levy came barely a week after the Federal Government had directed Deposit Money Banks to immediately begin the deduction of 0.375 per cent stamp duty charge on all mortgaged-backed loans and bonds. Defending the action of the Central Bank against the backdrop of opposing the policy, the Presidency in a statement on Wednesday, disclosed that the Cybersecurity levy was introduced to tackle cybercrimes and terrorism, saying Nigeria lost over N273 billion (approximately $762million) to cybercrime alone in 2022. It also claimed that the same levy is in place in Ghana and Rwanda. However, opposition to the policy grew on Wednesday, with the Trade Union Congress (TUC), ex-Labour Party (LP) presidential candidate in the 2023 elections, Peter Obi, and the Coalition of Northern Groups (CNG) rejecting it. Meanwhile, the presidency has disclosed that the Cybercrime Act 2024 is meant to protect the nation’s economy from collapse; saying it is not targeted at the masses.
“Those criticising the Act do not have the full knowledge of the rationale behind it.” It noted that the Nigeria Inter-Bank Settlement System (NIBSS) had revealed that the Nigerian banking sector lost over N273 billion (approximately $762 million) to cybercrime in 2022 alone. “Apart from that, there have been SIMswapping attacks on Nigerian banks since 2019 to date. “Flutterwave, a leading African fintech company, has faced several allegations of security breaches in recent months amounting to millions of dollars in losses to customers. “Even the Nigerian National Identity Management Commission (NIMC) has put adequate security in place to check incidents of data breaches.”
The presidency further said that Section 44 of the Cybercrime Act was designed for National Cyber Security Fund in which a levy of 0.005 of all electronic transactions by some businesses to fight cybercrimes and terrorism. It said contrary to insinuations, the Fund will be domiciled in the Central Bank within a period of 30 days.
“Also, an amount not exceeding 40 per cent of the Fund may be allocated for programmes relating to countering violent extremism. “The Federal Government is well-intended with the Cybercrime Act 2024. We live in a global village in Africa; we cannot afford to ignore the reality of the threats of cybercrimes to our economic survival. “The management of the Cyber Security Fund has enough checks and balances to prevent abuse. This government is determined to fight cybercrime,” the statement said.
